Breakfast Launch Dilemma

McDonald’s breakfast launch dilemma Farah Naz Baig

Farah Naz Baig is Lecturer in Marketing at the Institute of Business Administration, Karachi, Pakistan.

We provide provide foo food d tha thatt cus custom tomers ers love, day aft after er day aft after er day day.. Peo People ple just wan wantt mor more e of it (Ray Kroc).

It was mid-July 2011, when Jamil Husain (Marketing Manager), Atif Abbass and Ali Raza (Marketing Executives) Executives) were sitting in the the meeting room of Lakson Square Square Building, Karachi, Karachi, in order to discuss the fate of McDonald’s breakfast menu. It was Jamil’s idea to launch the breakfast menu in the Pakistani market. He, however, was unable to convince his team members who thought that the market was not ready to accept the breakfast option since there the re was a hug huge e dif differ ferenc ence e bet betwee ween n Pak Pakist istani ani lif lifest estyle yle and Wes Wester tern n lif lifest estyle yle.. Jam Jamilil presented his arguments before them but all in vain. Somehow he knew that the same arguments argum ents if prese presented nted in front of the top management management would lead to a ‘ ‘No’’ situa situation. tion. Just then the phone rang; it was Caroline, Company Secretary, confirming the meeting venue which was supposed to take place after two days.

Background McDonald’s, a company known for its hamburgers, was founded by two brothers Richard and Maurice McDonalds in San Bernardino, California in 1948 (www.en.wikipedia.org/wiki/  McDonald%27 (accessed July 4, 2011)) which was later bought by the franchise agent, Ray Kroc in 1955. McDonalds was present at more than 33,000 locations worldwide.

The author would like to thank Marketing Issues In Pakistan Class (Fall, 2011), especially Nadia Naeem, Aatira Mushtaq, Ayesha Waheed, Humayun Baber and Fizzah Shahid who helped me in this case. Disclaimer. This case is written solely for education educational al purposes and is not intended to represent successful or unsucces unsuccessful sful manageriall decision making. manageria The author may have disguised names; financial and other recognizable recogniza ble information to protect confidentiality.

DOII 10. DO 10.110 1108/2 8/2045 045062 062121 121129 129558 55877

In Pakistan, food was a source of entertainment. This could partly be attributed to the fact that there were not many entertainment options available and partly due to the Pakistanis’ love for good food. McDonald’s brought the branded ‘‘fast’’ food concept to Pakistan. The fast food concept was not very prevalent[1] in this South Asian market of 180 million people. However Howev er,, the media prol prolifera iferation, tion, satellite satellite TV exposure exposure and the positi positive ve word of mouth (of peo people ple who had con consum sumed ed McD McDona onalds lds’’ on the their ir for foreig eign n tou tours) rs) cre create ated d the hyp hype. e. No wonder one could see throngs of people gathering at McDonald’s when its first outlet opened in September 1998 in Lahore. The Karachi outlet opened a week after the Lahore’s openin ope ning. g. In 201 2011, 1, the there re wer were e 23 out outlet lets s ope operat rating ing in Pak Pakist istan an (fo (forr det detail ails s abo about ut the McDonald’s outlets, please refer to Exhibit 1).

Consumer behavior The eat eating ing hab habit it of the Pak Pakist istani ani con consum sumers ers var varied ied due to num numero erous us rea reason sons. s. Acc Accor ordin ding g to a research conducted by Gallup Pakistan’s research, 55 percent of Pakistanis ate meals three times a day. About 37 percent had two meals, 5 percent had one meal and 5 percent had meals mea ls mor more e tha than n thr thrice ice in a day day[2] [2].. Whe When n it cam came e to bre breakf akfast ast,, the pro produc ducts ts usu usuall ally y consumed were paratha[3], bread, tea[4], etc. (Table I). The breakfast breakfast prod products ucts consumed varied with the socio socio-eco -economi nomic c grou group p (plea (please se see Exhibit 2 for the socio-economic classification (SEC)). Labor class living away from home

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Table I   Breakfast items

Paratha Bread Tea Rusk Roti with curry Nothing Others

2006 (%)

2008 (%)

2009 (%)  

45 10 11 – 34 – –

41 11 13 – 33 – 1

49 10 9 7 18 2 –

Note:  30 years of polling on eating habits of Pakistanis 1980-2010, a Gallup Pakistan report Note: 30  Gallup and Gillani, 30 years of polling data on eating habits of Pakistanis Source: Gallup Source:

relied on the road-side dhabas[5] for their meals. The regular breakfast menu of lower class laborers usually involved paratha and tea (please refer to Table II which summarizes the breakfast menu consumed on daily basis by various SEC; Tables III and IV for other food preferences). The breakfast menu for the traditional Pakistanis consisted of rich and oily foods preferably the halwa puri. It had two separate dishes, one of halwa (a sweet made from semolina) and the other aloo cholay (a spicy chick pea and potato curry) eaten with

Table II   Class-wise breakfast consumption Breakfast items

Class-wise consumption  

Tea Roti/bread/paratha Egg Cerreal (c Ce (cor orn nfla flake kes, s, po porr rrid idge ge,, et etc. c.)) Cheese Fro Fr oze zen n fo food od (N (Nu ugg gget ets, s, cr cro oqu que ets ts,, pa patt ttie ies) s)

All classes All classes SEC A and B and (C not on regular basis) SEC SE C A (B an and d C no nott on re regu gula larr ba basi sis) s) SEC A (B and C not on regular basis) SEC SE C A and B

a

a

Indica icated ted by a U&Astudy con conduc ducte ted d andacco andaccordi rding ng to Gal Gallup lup’’s 30 yea yearr of eat eating ing hab habits its pol pollin ling g Note: Ind data: 90 percent consumers consume tea during breakfast

Table III Average meat consumption in a household per month Chicken (kg)

Beef (kg)

Mutton (kg)  

4 4 4 7 3

4 3 4 9 3

3 3 3 6 7

All Pakistan Punjab Sindh Khyber Pakhtoonkhwa Baluchistan

Source: Gallup Source:  Gallup and Gilani, 30 years of polling data on eating habits of Pakistanis

Table IV Light and heavy meal preferences preferences

Heavy lunch Heavy dinner Both meals heavy Both meals light No response

2003 (%)

2006 (%)

2008 (%)  

25 16 32 26 1

19 23 34 24

18 19 18 44 1

Source: Gallup Source:  Gallup and Gilani, 30 years of polling data on eating habits of Pakistanis

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puri – a small round deep fried flat bread. bread. The last course of the breakfast breakfast was usually chai[6]. This was usually accompanied by lassi[7] and depending on the drinkers taste, could be either salty or sweet. The sweet lassi option was often topped with malai[8]. This type of breakfast was usually consumed on weekends by all classes (upper-lower classes) (refer (re fer to Exh Exhibi ibitt 3, Fig Figure ure E1( E1(a) a) and (b) for the wee weeken kend d pre prefer ferenc ence e for bre breakf akfast ast). ). Per per person son cost for the entire menu (which consisted of puri, halwa and curry) ranged from Rs 20 to 40 depending on the location[9] (Exhibit 4). The type of breakfast consumed was impacted by: B

  The inc increa reased sed num number ber of fema females les ent enteri ering ng the work workfor force ce had led to the increased increased cons co nsum umpti ption on of re read ady y to co cook ok me meal als, s, re read ady y to ea eatt me meal als s an and d fr froz ozen en foo foods ds in th the e ur urba ban n ar area eas. s. Theworking Theworkin g andthe non non-wo -workin rking g fema female le cou could ld be cla classifi ssified ed bas based ed on the inc incomegroupand omegroupand life style as shown in Figure 1.

B

  Increased Increased heal health th consc consciousn iousness ess due to media proliferation proliferation[10] [10] and the incr increased eased number of gyms and health clubs in both posh and regular localities was an indication that health consciousness was rising.

B

The food prefe preferenc rences es depe depended nded on geog geographi raphical cal location also. People living in the Punjab province (Northern region) were famous for their excessive love for food. They were very forthcoming when it came to trying out new products. They usually preferred milder taste in food. People in Sindh province (Southern region) preferred spicy food.

B

In the urba urban n areas there was an increasing increasing trend of nucl nuclear ear family system because because of ruralrur al-urb urban an mig migrat ration ion,, inc incre reasi asing ng uti utilit lities ies cos costt and med media ia exp exposu osure re (in (incr creas eased ed individualistic values among the young people as opposed to collectivistic values).

B

The business community and numerous numerous other households specifically in the urban areas slept late at night and woke up late or in some cases just a few minutes before they had to leave for work.

On weekdays the working middle-class with kids preferred eating breakfast at home. The breakf bre akfast ast gen genera erally lly com compri prised sed of of egg eggs, s, home-m home-made ade rot rotii (br (bread) ead) and curr curry y. In the dual dual inc income ome families familie s there was a rising trend towards cereal, cereal, cheese and other ready to eat/re eat/ready ady to cook breakfast items. Breakfast was usually a rush time for these families as the kids got ready for school and mothers prepared lunch boxes for kids and husband. The morning hours from 7:00 7: 00 a.m a.m.. to 8: 8:30 30 a.m a.m.. we were re thepeak tr traf affic fic ho hour urs s an and d on one e co coul uld d se see e lo lots ts of hu hustl stle e an and d bu bustl stle e on the th e str stree eets ts as th the e sc scho hool ols s van vans s pic picke ked d up kid kids, s, fa fathe thers rs dr drov ove e kid kids s to sch schoo ooll (o (one ne co coul uld d no noti tice ce a typica typ icall mi midd ddle le-c -cla lass ss fa fami mily ly of th thre reee-fo four ur kid kids s in sch schoo ooll un unif ifor orm m dr drive iven n by th their eir fa fath ther er on a mo moto torr bike during these early morning rush hours) and office going people rushed to their work. Some So me of the SE SEC C A cl classwork assworking ing me men n an and d wo wome men n got th thei eirr qu quic ick k we week ekda day y br brea eakf kfas astt sol soluti ution ons s Figure Figur e1

SEC A and B

Working

Not an active social life; prefers to stay at home after  work.

 Active social life; prefers eating out (frequency would vary with income class).

Non-Working

Not an active social life; prefers to stay at home. Prefers homemade food

j

 Active social life; preferseating out (frequency would vary with income class).

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from out from outletsDunkin letsDunkin’’ Don Donuts uts or Espr Espresso esso.. Theprime rea reason son beh behind ind the cho choice ice of Dunk Dunkin’Donuts in’Donuts was wa s the av avail ailab abili ility ty of Du Dunki nkin’ n’ Do Donu nuts ts ou outl tlets ets in the SEC A ar area eas. s. Ea Each ch up upper per cl clas ass s ar area ea ha had d at least one Dunkin’ outlet. The breakfast solutions usually included products like sandwiches, wraps and rolls. A housewife belonging to the upper echelon of the Pakistani society either enjoyed breakfast at home prepared by her chef or had breakfast with friends at a fancy restaurant or cafe´  after dropping her kids to school. These formal or informal eating outlets visited by the upper strata of the society society initiall initially y offered offered only only continent continental al break breakfast fast but but some some of these outlets had recently included the traditional breakfast menu as well. The housewives breakfa bre akfast st ord order er rang ranged ed fro from m hig high-c h-calor alorie ie bre breakf akfast ast likeshakesand waffl waffles es to lowlow-cal calori orie e bro brown wn bread sandwiches depending on the health consciousness of these females.

Competition Acknowledging the trend of having traditional tea paratha or halwa puri for breakfast, the industry was dominated by the presence of local roadside dhabas and hotels that offered the serving. Not only was the serving cheap but it also satisfied ones hunger. Most of these dhabas were run by people of the nearby locality at a subsistence level. Bakeries were yet another key player in the industry. The variety in terms of baked food items that they offered along with hygiene and economical prices[11] made them a viable option for the consumer. These Thes e bake bakeries ries ranged from small corne cornerr stor stores es to large sprea spread d out businesses, businesses, e.g. Gourmet Bakers in Punjab. Punjab. The emergence of cafes cafes and restaurants (both local and foreign) foreign) in the last decade had made the food industry very competitive. For some, offering the breakfast brea kfast menu menu,, worked as a differentiat differentiation ion point. point. For other others s it was simply capitaliz capitalizing ing on the untapped unta pped potential potential to make some extra money. money. Thes These e rest restaura aurants nts and cafes’ not only brought the awareness among people about the continental food and but also developed the taste pale palette tte of the cons consumer umers. s. Few of the rest restauran aurants/ca ts/cafes fes actua actually lly serve served d brea breakfast kfast on daily basis while others offered brunch on Sundays. Knowing that the market at present had a small following of people having breakfast outside, the restaurants and cafes charged premium prices to maximize profits (please refer to Exhibits 5 and 6 for the competitive offering details). These restaurants offered both traditional as well as Western cuisine to cater to a larger audience of food lovers. Some of the famous brands were. ´  Ireland’s Butlers Chocolate Cafe  It was opened in Karachi on December 2009, on main Zamzama Boulevard (Posh locality of Karachi). It offered breakfast, mock tails, smoothies, shakes, waffles, truffles, ice cream, sorbets and chocolates. It had recently opened its outlet at the domestic and international terminal of Quaid-E-Azam International Airport. The price range for breakfast was Rs 300 and above. It offered valet parking for the ease of its customers. Espresso  Espresso was launched in 2004. It operated in Karachi and Lahore. It offered a menu packed with mouth watering appetizers, a selection of sandwiches, wraps, pastas, paninis and divine desserts. desserts. A sizeable range of teas, smoothies, smoothies, hot and cold beverages beverages and an array of coffees all created from the finest imported and local ingredients were available at the cafe´. The breakfast menu ranged from omelets, burritos, pan cakes, croissants, kids breakfast with price starting from Rs 250 (with the exception of baked beans; please refer to Exhibit 6 for details). It also offered delivery services in certain areas of Karachi and Lahore; these included the upper-class residential areas and office localities. The delivery timings were from 8:00 a.m. to 2:00 a.m. on weekends and 8:00 a.m. to 1:00 a.m. on weekdays (www.espresso.com.pk/menu.html). It offered privilege cards as well. It had four outlets in Karachi and one in Lahore. Dunkin’ Donuts  Dunkin’ Donuts started its operation in Pakistan in 2000. It had nine outlets in Karachi, five in Lahore Lah ore,, thr three ee in Isl Islama amabad bad and one in Pes Peshaw hawar ar.. Its ope operat ration ions s wer were e con contro trolle lled d in Ka Karac rachi hi by IFL and in Lahore and Islamabad by Phoenix Food (Pvt) Limited (www.espresso.com.pk/ 

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menu.html). It offered breakfast from 7:30 a.m. to 10:30 a.m. The minimum price in the breakfast menu was Rs 100. It offered various breakfast items such as sandwiches, pizza, croissants and coffee along with various combo deals.

Others  Other popular players in informal eating out category included cafe´  9, cafe´ 76, Gloria Jeans, Coffe Cof fee, e, Tea and Com Compan pany y (CT (CTC) C) and Roa Roaste sters. rs. The They y had bre breakf akfast ast men menu u ran rangin ging g from croissants, croissants, pizza, sandwiches sandwiches and coff coffee ee (please refer to Exhib Exhibits its 5 and 6 for details about price and breakfast offerings). These restaurants had an up market image. The other more formal eating out breakfast players included the four and five star hotels such as Sheraton, Avari and Marriott. The breakfast at these fancy restaurants started at Rs 900. Restaurants like Dominos and Pizza Hutt which were very popular in Pakistan did not offer any breakfast option.

McDonald’s customer profile McDonald’s catered to the urban population of Pakistan. Although McDonald’s penetration was mainly driven by the income group AB. SEC C was also amongst the target market. The top three segments of McDonald’s customer categorization: 1. the teens (15-25 years); 2. young adults adults (20-34 years); and 3. famil families ies with kids (FWKS (FWKS)) (30-49 years old, married with kids). McDonald’s devel McDonald’ developed oped its loyal loyalty ty measu measureme rements nts based on the rese research arch conducted conducted as shown in Figure 2. About 30 percent of the McDonald’s users were true loyals, 15 percent attitudinal loyals, 16 percent behavioral loyals and 39 percent competitive loyals (Source: interview with the marketing manger; base: all McDonalds users; please also refer to Exhibits 7-9 for the McDonald’s market in Pakistan). Jamil knew that there was not a great deal of investment required for this launch as the fryers and other equipment were in place. Only for some new items ite ms int intern ernati ationa onall sup suppli pliers ers had to be ide identi ntified fied and once tha thatt wor work k is don done e the raw materials[ mater ials[12] 12] woul would d be be at the facil facility ity withi within n a lead time of 45-5 45-50 0 days days (plea (please se refe referr to to Exhib Exhibits its 10 and 11 for the proposed breakfast).

Figure Figur e2 McDonald’s most often Behavior Loyal: Loyal: People using McDonald’s most often but prefer another Quick Service Restaurant (QSR)

True Loyal: Loyal: People using McDonald’s most often and whose favorite QSR restaurant is McDonald’s too.

Competitive Loyal: Loyal: People using another QSR most often and prefer another one too.

Attitude Loyal: Loyal: people using another QSR most often and whose favorite is McDonald’s. McDonald’s preferred

(Think Positive)

Source: Interview with the Marketing Manger Source: Interview

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McDonald’s in India McDonald’ McDona ld’s lau launch nched ed its bre breakf akfast ast men menu u in 200 2009. 9. The pur purpos pose e of lau launch nching ing the men menu u was to capture the market which had no real branded option to compete with. According to an expert analysis 60 percent of the young Indians in Mumbai and other metropolis had at least one breakfast outside the house in a week – be it a roadside vendor, the office or the station. McDonald’s breakfast was aimed to serve as the next best substitute to idlis, dosas and vada pavs. Keeping the masses in mind, they proposed a menu that was not only affordable but had a tra tradit dition ional al ess essenc ence e to it. The communic communicati ation on for the men menu u hig highli hlight ghted ed the importance of convenience and on-the-go breakfast option. The campaign was launched after aft er six months months of ini initia tiall tes testt mar market keting ing in key cities cities of Ind India ia fol follow lowed ed by a com comple plete te promotion drive throughout the country. Please refer to Table V for the items served on the breakfast brea kfast menu alon along g with thei theirr price prices s (in India Indian n rupee rupees) s) (www (www.mcdo .mcdonalds naldsindia india.com/  .com/  breakfast-menu.html (accessed May 11, 2011)).

McDonald’s in Malaysia In contrast to both Pakistan and India, Malaysia was a metropolitan country. McDonalds realized the potential in the economy and decided to invest in the breakfast sector. The first mover advantage worked in their favor and they were able to seize a sizeable share in the market mar ket.. The They y use used d a two pro pronge nged d com commun munica icatio tion n app approa roach ch tar target geting ing bot both h adu adults lts and families simultaneously. They offered on-the-go weekday meals for the working class wherea whe reas s on the oth other er han hand d ser served ved wee weeken kend d bre breakf akfast ast bas basket kets s to FWK FWKS S esp especi eciall ally y aged between five to 15 years (Please refer to Tables VI and VII for the Malaysian weekday Table V Indian breakfast menu menu Price (Indian  rupees) 

Item  Idli McMuffin Steamed vegetarian McMuffin Paneer and corn McMuffin Sausage McMuffin Sausage McMuffin with egg Steamed corn Crisp hash brown Hot cakes with maple syrup and butter ‘ ‘Big breakfast’ ’ platters

35 35 40 45 55 20 20 55 99

Source: www.mcdonalds Source:  www.mcdonaldsindia.com/breakfa india.com/breakfast-menu.html st-menu.html (accessed May 11, 2011)

Table VI   Malaysian breakfast menu Week day menu deals

Price (RM)  

Sausage McMuffin with egg þ coffee/tea 4.5 Sausage McMuffin þ coffee/tea 4.00 Egg McMuffin with chicken roll þ coffee/tea 4.5 Two pieces hotcakes þ coffee/tea 4.5 Chicken muffin þ coffee/tea 4.5  www.mcdonalds.com.my/ourfood/me om.my/ourfood/menu_items.asp nu_items.asp (accessed May 11, 2011) Source: www.mcdonalds.c Source:

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Table VII Malaysian weekend breakfast breakfast menu Weekend menu deals (family breakfast box) Big breakfast: English muffin (with scrambled eggs and sausage or grape jam), chicken sausages, hash browns, hot cakes, coffee One big breakfast with hash browns RM 24.90 One sausage McMuffin with egg/one egg McMuffin with chicken roll Two pieces hot cakes Two pieces hash browns Three coffee/tea (a) One big breakfast with one piece hash RM 19.90 browns (b) One sausage McMuffin with egg (c) Two pieces hot cakes (d) One piece hash brown (e) Two coffee/tea Source: www.mcdonalds.com.my/ourfood.asp Source:  www.mcdonalds.com.my/ourfood.asp (accessed May 11, 2011)

and week weekend end brea breakfast kfast menu menu)) (www (www.mcdo .mcdonald nalds.com s.com.my/o .my/ourfoo urfood/me d/menu_it nu_items. ems.asp asp (acces (ac cessed sed May 11, 201 2011)) 1)).. Rec Recent ent tim times es had see seen n the emergenc emergence e of loc local al caf cafes es and international food chains giving stiff competition to its market dominance. The food giant, howe ho weve verr, ha had d ma main inta tain ined ed it its s sh shar are e an and d wa was s ex expe pect cted ed to gr grow ow by mo more re th than an 20 pe perc rcen entt at th the e end of 2011.

Moving forward While Jamil reviewed the success stories of various markets and prepared his presentation he thought about the points that would help him convince his top management about this difficult yet exciting launch. If the launch were to happen, what would be the roll-out plan like? Should it be restricted to certain cities/outlets or should it be launched nationally? What would be the menu? What is the right time? Somehow, he knew that that the presentation would be an uphill task.

Notes 1. There were certain certain traditional on the go products like bun Kebab, kebab rolls available. available. 2. 30 years of polling on eating habits of Pakistanis 1980-2010, 1980-2010, a Gallup Pakistan Report. 3. Traditional flat bread. 4. About About 94 perc percent ent of the people consumed consumed tea, while 2 perc percent ent consumed consumed coffee (Gallup (Gallup and Gilani/National Survey 2009). 5. Small road side restaurants offering offering food at cheap rates. 6. Chai is the Urdu Urdu word for for tea. 7. Yogurt-based milk shake. 8. Cream produced produced from sifting unprocessed milk. 9. The posh locations charged higher prices for the traditional menu as compared to the middle-class localities.

Keywords:  Breakfast, Launch, Glocal marketing, Food industry, New products, Marketing

10. Media/proliferation had had an important role to play in educating the consumers about healthy eating and balanced diet. Cooking channels had emerged and there were numerous cooking programs that educated the consumers about the benefit of healthy diet. 11. The price of food item at baker bakeries: ies: sandwiches sandwiches (Rs 25-6 25-60, 0, depending depending upon the type), patties (Rs 6-15), Rolls (Rs 15-50), pizza slice (Rs 50-90), small pizza (Rs 15-30). 12. The raw materials were procured from the international international market.

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Exhibit 1

Table EI Details of McDonald’s outlets City

Location

Lahore

Railways Kiosk & MDS Jail Road Fortress Stadium Park Lane Tower Main Gulberg Ali Towers Allama Iqbal Town Model Town Defence-I Defence-III Air Port Dolmen Mall Hyderi Stadium Road Dolmen Mall Tariq Road Lakson Square Najeeb Center Park Towers Corniche Autobhan Sity Si tyan ana a Roa oad d Clover Plaza Jinn Ji nna ah Pa Park rk McD cDo ona nald lds s F-9 Pa Park rk

Karachi

Hyderabad Fais Fa isal ala aba bad d Sialkot Raw awal alpi pin nid idii Isla Is lam mab aba ad

24 hours dine-in and take away

Birthday parties

24 hours drive-thru  

U U U U

U

U U U U

U

U

U

U

U

U U U U U

U

U U

U

U

U

U

U U

U U

U

 Interview with the marketing manager Source: Interview Source:

Exhibit 2

Table EII   Socio-economic classification

Occupation of chief earner  Unskilled worker Petty traders Skilled worker Non-executive staff Supervisor level Small shopkeeper/businessman Lower/middle executive officer Self-employed/employed professionals Medium businessman Senior executive/officer Large businessman/factory owner

Illiterate (can  read/write) 

Less than  class 5 

E E D D D D

E E D D D D

E E D D C2 C2

E E D D C2 C2

E E D D C2 C2

D D D D C1 C1

D D C2 C2 C1 C1

C1

C1

C1

B

B

B

B

C1

C1

C1

B

B

B

B

C1 B A

C1 B A

C1 B A

B A A

B A A

B A A

B A A

Source:   www.docstoc.com/docs/69777869/Annexes Source:

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Education of chief earner  Up to  Up to 5-9  secondary  classes  leve le vell Inte In term rmed edia iate te Grad Gradua uate te Post Post-g -gra radu duat ate  e 

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Exhibit 3 30 years of polling data on food habits of Pakistan conducted by Gallup and Gilani (National Surv Su rvey ey 20 2009 09). ). Sa Samp mple le si size ze co comp mpri rise sed d of 1, 1,00 0000-2, 2,50 500 0 me men n an and d wo wome men n ag aged ed 18 þ conducted in urban and rural Pakistan Figure E1. Figure E1 Eating out preferences preferences

ii(a) Eating out in a restaurant at least once per month

No 90%

Yes 10%

Special 23%

ii(b) Consuming special breakfasts on weekends

Same as another day 77%

Source: Gallup and Gilani, 30 years of polling data on eating habits of Pakistanis Source: Gallup

Exhibit 4

Table EIII Price list of traditional traditional breakfast Item

Price (Rs)

Chai Doodhpati (special tea) Paratha Anda (fried egg) Puri Halwa Channa/aalo

15 20 10 15 12 20 per plate 30 per plate

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Exhibit 5 Table EIV   Competition Name

Gene

City

Location

Cuisine

Al Bustan Asia Live Butlers BBQ Tonight Cafe´ 9 Cafe´ 76 Cafe´ Bl Blu ur Gin inge gerr Cafe´ Ch Cha att tter erbo box x Cafe´ flo Ciao Cinna Cin namon mon Lo Loung unge e The Diner Dunkin Donuts Espresso Fanoos Gunsmoke Jharoka Latte Lounge Lal Ojla Marcopolo Nadia N’eco’s Okra Pompei Rangoli The Cre´pe Fa Fact ctor ory y T2F cafe´   Cinn Ci nnab abon on Ba Bake kery ry CTC Jammin Java Hotel One Kim’s Lahore Gate Malee’s Mahek’s Masoom’s Namak Mandi Rooftop Salt n Pepper The Spot Chaye Khaana Espr Es pres esso so Lo Loun unge ge Jia’s Deli KC Grill Mocca Nirvana

Restaurant Restaurant Cafe Restaurant Cafe´ Cafe´ Caf afe e´ Caf afe e´ Cafe´ Cafe´ Cafe Caf e´ Restaurant Cafe´ Cafe´ Restaurant Cafe´ Restaurant Cafe´   Restaurant Restaurant Cafe´ Cafe´   Restaurant Restaurant Restaurant Cafe Ca fe´   Cafe´ Cafe Ca fe´ Cafe´ Cafe´ Restaurant Restaurant Restaurant Cafe´ Restaurant Cafe´   Restaurant Restaurant Restaurant Restaurant Restaurant Cafe Ca fe´ Restaurant Restaurant Cafe´ Cafe´

KHI KHI KHI KHI KHI KHI KHI KHI KHI KHI KHI KHI KHI KHI KHI KHI KHI KHI KH KHI KHI KHI KHI KH KHI KHI KHI KHI KH KHI LHR LHR LHR LHR LHR LHR LHR LHR LHR LH LHR LHR LHR LHR LH ISL IS ISL ISL ISL ISL ISL

Sheraton Avari Av Zamzama Old Clifton Zamzama Za Old Clifton Zamzama Za Zamzama Za Old Clifton Zamzama Za Avari DHA DH – – Sheraton Zamzama Za Regent DHA Shahrae Faisal PC Marriot DHA Zamzama Shapes Arena DHA DHA Gulberg/DHA Gulberg DHA Gulberg Avari Holiday Inn Gulberg Marvel Hotel DHA Hotel One Maisonette Gulberg Hotel Park Ho F-6 Markaz F-7 Markaz Blue Area Bhitai Road Kohsar Mart Ko G-6 Markaz G-

Western Western Western Cesi Western Western Western Western Western Western Western Western Western Western Western Western Both Western Desi Both Western Western Western Western Desi Western Both Western Western Western Both Western Both Both – Western – – Both – Both Both Both Both Both Both

Average price (Rs) 900 1,100 . 300 . 650 . 400 . 400 . 400 . 400 . 400 . 400 . 400 . 500 . 200 . 300 . 500 . 500 . 850 – . 600 . 900 . 900 – – – . 700 – – – . 400 . 300 . 400 . 700 . 600 . 300 . 400 – . 400 . 300 . 400 . 650 – – – . 700 – – . .

Breakfast (daily) U U U

U U

U U U U U U U U U U U U U U U U U U U U

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U U U U U U

U

U U U U U U U U U U U U U U

Sources: www.kara www.karachisnob.com/be chisnob.com/best_breakfast_places_in_karac st_breakfast_places_in_karachi.htm; hi.htm; www.fc www.fcpakistan.com/; pakistan.com/; personal visits

PAGE 10 EMERALD EMERGING MARKETS CASE STUDIES  VOL. 2 NO. 8 2012

Brunch (Sunday)  

U

Exhibit 6 ´  la carte breakfast offerings Table EV A Menu

Espresso  

Oatmeal porridge Chicken fagita omelet Big steak omelet Steak and eggs Breakfast yougurt Aussie omelet Egg white omelet Cheese omelet Mushroom/herb omelet Tomota/cheese and mushroom omelet Cheese, pepperoni and onion omelet Pakistani omelet Spanish omelet Scrambled eggs Poached/classic fried/boiled eggs Kid’s breakfast Bagel with cream cheese Breakfast burrito Chicken frankfurters Baked beans Pancakes with maple syrup French toast with maple syrup Waffles with ice cream and maple syrup Croissant with cream cheese, strawberry preserve/orange marmalade Egg and cheese sandwich Butter milk pancakes Banana pancakes Blueberry pancakes Chocolate hazelnut pancakes Egg cheese roll Plain roll

Gloria  Jeans 

Dunkin  Donu nuts ts

Roas aste ters  rs 

´  Cafe  9 

´  Cafe  76

Cinn Ci nnab abon on Nec Neco’ o’s  s 

195 365 375 385 155

325

345

325

315 315 350 350 375 375 350 375 325 275 315 295 475 215 65 265 265 315 275

329 275

395

265

300

225

285

325 325 300 300 275

399 239 229

265

399

225 215 275

265 295

230 300

269 329 319

275 100 225

265 265

295 295 250 230

Exhibit 7 Figure E2   SEC urban Pakistan

SEC

SEC %

Population in #

A1

4%

11,795

A2

5%

1,361,818

B

12%

3,257,682

C

21%

5,660,889

D

22%

5,901,210

E1

15%

4,058,75 1

E2

20%

5,367,164

Source: Interview with the marketing manager Source: Interview (Research conducted for the company)

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VOL. 2 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES  PAGE 11

Exhibit 8 Figure E3 Population distribution by SEC’s McDonald’s McDonald’s market

Source: Interview Source: Interview with the marketing manager (based on the Pakistan Population Census Data 1998-1999; Gallup Pakistan 2004-2005)

Exhibit 9 Table EVI McDonald’s age-wise and and SEC-wise penetration Year 2010 (%) (Pakistan)  McDonald’s penetration (age wise) (base: all interviewed)  Teens Young adults 30 þ singles FWKS FWOKS McDonald’s penetration (SEC wise) (base: all interviewed)  SEC AB SEC C1 SEC C2 Profile of McDonald’s (age wise) (McDonald’s users interviewed)  Teens Young adults 30 þ singles FWKS FWOKS Profile of McDonald’s (SEC wise) (McDonald’s users interviewed)  SEC AB SEC C1 SEC C2 Profile of McDonald’s visit (age wise) (McDonald’s Users interviewed)  Teens Young adults 30 þ singles FWKS FWOKS Profile of McDonald’s visit (SEC wise) (McDonald’s users interviewed)  SEC AB SEC C1 SEC C2

45 57 39 44 39 49 47 43 28 36 7 50 22 48 46 37 26 36 5 49 21 44 43 30

Notes:  Disclaimer: figures have been disguised in order to maintain company’s privacy; sample size Notes: Disclaimer: not disclosed by the company due to confidentiality purpose

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PAGE 12 EMERALD EMERGING MARKETS CASE STUDIES  VOL. 2 NO. 8 2012

Exhibit 10 Table EVII   Proposed breakfast menu Product

Price (Rs)

Egg McMuffin Sausage with egg Sausage McMuffin Big break fast Hash brown Hot cakes Coffee cappuccino Hot tea

140 150 130 375 50 225 100 50

Exhibit 11

Table EVIII Big breakfast is one option which has  Muffin Chicken sausage Hash brown Scrambled eggs Jam portion

1 1 1 2 1

Corresponding author Farah Naz Baig can be contacted at: [email protected]

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VOL. 2 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES  PAGE 13